Share repurchases reach record high: stock exchange

By Chen Yung-ji / STAFF REPORER

The number of publicly listed firms in Taiwan that carried out share repurchases last year reached a record 481, or 38 percent of all listed firms, with total buyback value hitting a record NT$109.9 billion (US$3.32 billion), Taiwan Stock Exchange tallies showed.

A share repurchase, which allows a company to buy back shares on the open market with its own funds, is used to prop up share prices, transfer shares to employees or, to a lesser extent, to cancel and reduce capital stock.

China Development Financial Holding Corp (中華開發金控) ranked first among local listed firms that bought back shares last year, with a total of 836 million shares bought back, followed by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest producer of chips designed by other companies, with 783 million shares.

Though its buyback volume was lower, HTC Corp (宏達電), the world’s largest maker of mobile phones running on Microsoft Corp’s operating system, was third in terms of spending because of its higher share price. HTC bought back NT$3.4 billion in shares.

HTC’s share price, the highest among all listed firms in Taiwan, fell by the 7 percent daily limit yesterday to close at NT$323 on the Taiwan Stock Exchange.

On the over-the-counter market, Taiwan’s top dynamic random access memory (DRAM) chip maker, Powerchip Semiconductor Corp (力晶半導體), which is struggling in the face of an oversupply of memory chips in the market, placed first with a projected spending of NT$780 million to buy back 110 million shares.

Legislation permitting share repurchases was passed in 2000, amid the burst of the dot-com bubble. Textile manufacturer Kwong Fong Industries Corp (廣豐) was the first Taiwanese firm to buy back shares.

A total of 168 firms followed Kwong Fong’s move to buy their own shares in the first year after enactment and more than 100 firms have done so per year since.

The number of listed firms buying back shares rose to 481 last year, Taiwan Stock Exchange tallies showed.

Over the past five years, the value of share buybacks topped NT$50 billion every year. Although the value rose to NT$85 billion in 2007, TSMC alone contributed NT$48.4 billion.

Last year, excluding the 48 firms that are still executing their buyback plans, the accumulated buyback value of publicly listed firms reached NT$109.9 billion, marking the highest amount on record.